Correlation Between SPDR FTSE and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both SPDR FTSE and Xtrackers MSCI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SPDR FTSE and Xtrackers MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR FTSE UK and Xtrackers MSCI China, you can compare the effects of market volatilities on SPDR FTSE and Xtrackers MSCI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in SPDR FTSE with a short position of Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR FTSE and Xtrackers MSCI.
Diversification Opportunities for SPDR FTSE and Xtrackers MSCI
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPDR and Xtrackers is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding SPDR FTSE UK and Xtrackers MSCI China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI China and SPDR FTSE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on SPDR FTSE UK are associated (or correlated) with Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI China has no effect on the direction of SPDR FTSE i.e., SPDR FTSE and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between SPDR FTSE and Xtrackers MSCI
Assuming the 90 days trading horizon SPDR FTSE UK is expected to generate 0.22 times more return on investment than Xtrackers MSCI. However, SPDR FTSE UK is 4.63 times less risky than Xtrackers MSCI. It trades about 0.26 of its potential returns per unit of risk. Xtrackers MSCI China is currently generating about 0.01 per unit of risk. If you would invest 597.00 in SPDR FTSE UK on September 19, 2024 and sell it today you would earn a total of 17.00 from holding SPDR FTSE UK or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPDR FTSE UK vs. Xtrackers MSCI China
Performance |
| Timeline |
| SPDR FTSE UK |
| Xtrackers MSCI China |
SPDR FTSE and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR FTSE and Xtrackers MSCI
The main advantage of trading using opposite SPDR FTSE and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR FTSE position performs unexpectedly, Xtrackers MSCI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI's long position.| SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR SP Utilities | SPDR FTSE vs. SPDR MSCI Europe | SPDR FTSE vs. SPDR MSCI EM |
| Xtrackers MSCI vs. Xtrackers MSCI USA | Xtrackers MSCI vs. Xtrackers USD Corporate | Xtrackers MSCI vs. Xtrackers MSCI AC | Xtrackers MSCI vs. Xtrackers MSCI World |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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